For the third time in a year, the divided 112th Congress is dancing on the edge of catastrophe, locked in a bitter partisan battle over fiscal measures, with unrelated policy debates clinging to the side.
Republicans and Democrats do not agree on how to pay for something that both sides claim to want — extension of a payroll tax holiday for almost every worker — and have until the end of the year to work it out or see the tax go up, something that most economists say would further damage the nation’s fragile economic health by taking money out of consumers’ pockets.
Now tied to this measure is a plan to keep the government financed through the rest of the fiscal year, because Senator Harry Reid, Democrat of Nevada and the majority leader, has indicated that he will not permit a vote on the huge spending measure until Republican and Democrats can come together on the payroll tax bill, which would also include an extension of unemployment benefits.
If an agreement on the spending bill does not come by midnight Friday, the government will be unable to pay its bills unless Congress passes yet another stop-gap financing bill to buy time, something the White House indicated late Wednesday night that it would prefer.
Leaders of both parties say they are determined to avoid a pre-Christmas shutdown, raising the possibility that Congress may just pass a short-term bill to keep the government open and kick the whole payroll tax and spending mess into next year.
The ugly dynamic mirrors the battles of last spring, when the government came within a whisker of shutting down over a spending fight, and last summer, when the nation almost defaulted on its debt obligations when Congress fought over raising the debt ceiling.
Now, with Congress entering a winter of discontent, each side expressed outrage — much of it manufactured — on Wednesday and blamed the other side for the potential debacle looming at the end of the week.
After meeting privately with President Obama on Wednesday, Senate Democrats began to cobble together a new deal to extend the payroll tax without using a surcharge on incomes over $1 million, something Republicans detest. They hope the new measure will have legs in both chambers, but Mr. Obama’s press office said Wednesday that the president would like Congress to pass a short-term financing measure, known as a continuing resolution, for now.
At the same time, House Republicans, who have already passed a payroll tax extension that Senate Democrats oppose, late Wednesday night filed their own spending bill that they may bring to the floor Friday it an attempt to pass it, leave town and force the Senate either to take or leave the House measure. But it was far from clear that they had the necessary votes to execute that tactic.
The last-minute wrangling is the predictable outgrowth of the failure last month of the special Congressional committee assigned to find $1.2 trillion in deficit savings. The panel was supposed to take care of the payroll tax holiday, the extension of unemployment issues and numerous other things, but its collapse left the fate of those issues and others up in the air.
The threat of the potential December shutdown is even more bizarre than the previous two near-misses, because it centers on the rank-and-file Republicans’ reluctance to extend a tax cut to middle-class workers and relatively minor issues over a spending bill that each side was tantalizingly close to signing off on.
This latest in a series of high-profile, last-minute fights, all in a single year, underscores that the 112th Congress has no modern antecedent for what many see as its unusual — and potentially dangerous — brinkmanship.
“This whole year has been historic in its patterns,” said Thomas E. Mann, a senior fellow at the Brookings Institution. “They always get work done at the end of sessions, they always put things off until they have to do them, but it’s the hostage taking and recklessness of it all that is so unusual.”
The day began with Mr. Reid sparring with Senator Mitch McConnell of Kentucky, the minority leader, on the Senate floor, with Mr. Reid expressing bafflement over Mr. McConnell’s refusal to let the Senate vote on the House payroll tax bill that passed earlier in the week.
Mr. Reid wants to quickly vote the bill down because while it would extend a cut in Social Security payroll taxes for 160 million workers, it also eases the way for an oil pipeline opposed by environmental groups, blocks certain air pollution rules, freezes the pay of many federal employees through 2013, increases some Medicare premiums, and greatly reduces unemployment benefits and adds a host of new rules for receiving them.
Mr. McConnell said he would not permit a quick vote on the measure until the spending agreement was passed in the Senate.
For their part, Senate Democratic leaders met with President Obama at the White House and resolved to prepare a new offer that would exclude their earlier plan to pay for the payroll tax holiday with a surcharge on incomes over $1 million, seeking savings instead from a variety of federal programs, with many of the cuts culled from the failed bipartisan committee’s list of things both sides agree upon.
As talk of another short-term spending agreement circulated, Jay Carney, the White House spokesman, said such a plan was not ideal but could be employed if a shutdown loomed.
Given the “dysfunctionality” that Congress has demonstrated this year, Mr. Carney added, it would be hard to “suggest that this Congress is capable of achieving an ideal.”
At the House, Speaker John A. Boehner said the ball was in the Senate’s court, even as he suggested that his chamber might pass its own spending bill based on a bipartisan agreement that was near completion, in spite of some Democratic concerns about provisions that would limit family planning for women in the District of Columbia and restrict visits to Cuba by Cuban-Americans.
“There is no reason for it to be held hostage to try to give one side leverage,” Mr. Boehner said.